Please read this carefully! it's $2 billion including the other charges, like staff, property buy outs, and other stuff like this.

Thursday, June 9, 2005 - 12:00 AM -- Updated 11:49 AM

Monorail price tag exceeds $2 billion

By Mike Lindblom

Seattle Times staff reporter

Joel Horn, monorail project's executive director

Seattle Monorail Project updates

State auditor's letter to Monorail agency

Breakdown of $2 billion price tag

The price of Seattle's planned monorail has surpassed $2 billion, adding to the public cost of a project that already is likely to take decades to pay off.

Monorail officials had advertised a $1.75 billion estimate when voters approved the line in 2002. Reasons for the increase include higher costs for staff and design consultants as well as land purchases for stations on the 14-mile line from Ballard to West Seattle.

Meanwhile, State Auditor Brian Sonntag, noting concerns about monorail financing, contracting and public disclosure, has notified the Seattle Monorail Project (SMP) that his office will review those issues in the agency's upcoming annual audit. His letter, dated Tuesday, mentions State Treasurer Mike Murphy's doubts that the monorail's car-tab tax can raise enough money to pay off construction debt.

Last week, monorail officials announced a tentative contract with a team of companies to build the tracks, stations and trains for "$1.6 billion and change." When land, agency overhead and other costs are added, the total rises to just over $2 billion, a Seattle Times review shows.

SMP Executive Director Joel Horn said the overall costs, plus additional cash reserves, amount to $1.94 billion in today's dollars, after adjusting for a 6 percent inflation rate. The Times and original monorail projections described dollars in the year they are spent, not adjusting them for inflation.

Like many large public-works projects, the monorail relies on selling bonds to raise money for construction because taxes generally don't flow in early enough to pay the builders.

Horn said he expects to raise more than enough money to complete the project, despite a voter-approved debt limit of $1.7 billion in current dollars. The 2002 ballot measure did not set a spending limit on the project.

The agency intends to minimize its debt payments in the short run by deferring interest payments to later years while issuing bonds of up to 40 years in duration. The bond repayments would be timed so the outstanding principal never breaks the debt cap, Horn said.

Critics have likened a 40-year debt plan to a family making the minimum payment on a credit-card bill.

Asked if the agency is trying to sidestep the debt cap through its borrowing strategies, Horn answered: "Does it break faith with the voters? Absolutely not, period.
"The point here is, we have done something amazing," he said. "We have taken a project with a very substantial problem and managed to deliver it with one-third less revenue." Car-tab taxes have been coming in about a third less than the original plan predicted. Monorail planners had predicted that plan could retire the tax in roughly 25 years.

Krista Camenzind, of the critics' group OnTrack, disagreed with Horn. "Wasn't the whole point that this was a well-planned and disciplined project? That's the rhetoric they were using at the time."

The tentative contract contains 16 of the 19 stations previously proposed. Trains would arrive eight minutes apart on opening day in 2010, because the agency will buy fewer train cars. Monorail officials have mentioned the possibility of funding extra trains by tapping into the proposed $4 billion budget to replace the Alaskan Way Viaduct with a tunnel.

Peter Sherwin, a sponsor of two pro-monorail initiatives, said a bottom line of $2 billion seems acceptable.

He sees the plan now for fewer stations as a plus, speeding travel times. The plan has improved because it includes special downtown track switches to allow the city core more-frequent service, he said. Stations were moved to off-street sites for aesthetic reasons, an expensive change. He believes another downtown station, at Second Avenue and Madison Street, will be added back by opening day.

Builders must obtain $500 million in liability insurance to guarantee a finished line. Cleve Stockmeyer, a monorail-board member, said that provision has added tens of millions of dollars to the contract with Cascadia but provides value unseen by the average citizen.

"This is within 10 or 15 percent of what the estimates were," Sherwin said. "Many of the people who were critics of the system insisted on some of the changes that are happening today. ... Those people, if they were honest in their answers, will say we've improved it."

Voters have backed a monorail four times since 1997, SMP board member Cindi Laws pointed out. She remains comfortable with the cost, in part because she expects the system to last a century.

"We're breaking faith if we don't build the project. The point is to be rational and clear-headed, and not spend 10 cents more than we have to spend," she said.

The agency plans to release more details June 20. Horn said the package contains $234 million in cash reserves, though roughly half is earmarked for known needs such as relocating underground utility lines, compensating Seattle Center for the loss of the current monorail, and public art.

If construction goes well, Horn said, money will be available in 2007, 2008 or 2009 to add stations.

it's a ridiculous project..........monorail is a joke and a amateur technology. are Seattlites serious about building a competent transit system as this is the completely wrong road to take.......14 km of monorail at a cost of US$2 billion is a joke.

__________________"My Homer is not a communist. He may be a liar, a pig, an idiot, a communist, but he is NOT a porn star." - Abe Simpson
"Preparations for the Vancouver2010Olympics are progressing so well, it's boring. We'd like there to be some challenges, so we [the IOC] could shout at them." - IOC (Sept. 2007)

"In medieval Europe if you didn't like somebody's argument and couldn't think of a real response you called them a witch and demanded they be burned at the stake. In the US you call them unpatriotic, and in Canada you call them racist."

Well, look at Japan....they find monorail useful! We are just dumb people that don't know how to make effective transit system compared to Japan.

Here in Vancouver, we're building a 19 km line that costs US$1.3 billion and that line has technology that is actually rapid transit and is competent, not this monorail crap that Seattle is coming up with......we're paying less for a higher standard technology for a line that is longer and that is mostly subway.

Seattle is definetely doing something very wrong here.

__________________"My Homer is not a communist. He may be a liar, a pig, an idiot, a communist, but he is NOT a porn star." - Abe Simpson
"Preparations for the Vancouver2010Olympics are progressing so well, it's boring. We'd like there to be some challenges, so we [the IOC] could shout at them." - IOC (Sept. 2007)

"In medieval Europe if you didn't like somebody's argument and couldn't think of a real response you called them a witch and demanded they be burned at the stake. In the US you call them unpatriotic, and in Canada you call them racist."

^ the only advantage is that Seattle already has a monorail line in place......but it's a poor technology for rapid transit, at least for Seattle.

__________________"My Homer is not a communist. He may be a liar, a pig, an idiot, a communist, but he is NOT a porn star." - Abe Simpson
"Preparations for the Vancouver2010Olympics are progressing so well, it's boring. We'd like there to be some challenges, so we [the IOC] could shout at them." - IOC (Sept. 2007)

"In medieval Europe if you didn't like somebody's argument and couldn't think of a real response you called them a witch and demanded they be burned at the stake. In the US you call them unpatriotic, and in Canada you call them racist."

Monorails have simple-looking rails, but I don't like their ride quality. I rode the Disneyland monorail and it was really bumpy. So far no one has informed me otherwise (i.e. other monorail systems being very smooth, like normal railways).

The $2 billion price tag quoted in the article contains a number of items beyond the construction costs. Among these are operating subsidies for the first 10 years of operation and a $200 million contingency fund. The contract to build the system is a fixed-price contract, so most construction cost overruns would be the contractor's responsibility and would not be taken from the contingency fund.

The actual contract to build the system is for $1.6 billion. This is a Design-Build-Operate-Maintain (DBOM) contract that includes the first 5 years of operations with options for two additional 5-year terms. One of the things required of the contractor is a $500 million bond guaranteeing construction and a $50 million bond guaranteeing operations. I don't know the exact cost of holding a $500 million construction bond over the 5-year construction period, but it is bound to be significant. One could estimate the cost based on $500 million x 5% x 5 years = $125 million. There has been much criticism of the monorail agency that the DBOM approach requires the contractor to assume much of the risk, which forces the contractor to inflate his price.

The biggest issue facing the monorail agency is whether the cost of building the system can be covered with the existing tax base. The monorail is being funded with a 1.4% tax on motor vehicles. The monorail agency is relying on a steady rise in the value of the motor vehicle tax base plus an exotic funding scheme to pay back bonds that will be issued to raise the funds to build the system. The city council has hired an audit agency to review the financing scheme and report on its viability. Final approval from the city council is necessary for the project to go forward.

^ the only advantage is that Seattle already has a monorail line in place......but it's a poor technology for rapid transit, at least for Seattle.

I've rode it, just does not seem feesible for modern rapid transit. Seemed more like a little tourist ride than anything. From the space needle/EMP to a shopping centre downtown, maybe all of three minutes and a very bumpy ride.

And flying in a first generation 707 wouldn't convince you that jets were going to be the backbone of short flights between two nearby cities, either. The Seattle monorail is old. The fact that it still works at all given that it was in essence a prototype is really pretty remarkable. And the disney monorails are more attraction than transportation - the design was seriously comprimised in order to make it more attractive.

People hate the idea of a monorail because in this country it has always been used in theme parks and fairs, and peopel refuse to believe at this point that anything fun can be functional. Monorails work in other countries just fine, the technology is inherently simpler than steel rail/trains, and once systems start being considered and built instead of sumarrily dismissed then there will be competition in the marketplace for manufacturers.

And flying in a first generation 707 wouldn't convince you that jets were going to be the backbone of short flights between two nearby cities, either. The Seattle monorail is old. The fact that it still works at all given that it was in essence a prototype is really pretty remarkable. And the disney monorails are more attraction than transportation - the design was seriously comprimised in order to make it more attractive.

People hate the idea of a monorail because in this country it has always been used in theme parks and fairs, and peopel refuse to believe at this point that anything fun can be functional. Monorails work in other countries just fine, the technology is inherently simpler than steel rail/trains, and once systems start being considered and built instead of sumarrily dismissed then there will be competition in the marketplace for manufacturers.

I don't think there is anything wrong with the technology. They have proven themselves reliable, safe, and comfortable thru the world. As I have stated before thou, this is an outrageous price as is the LRT line.
Calgary built their entire 42km Ctrain with just $640milCDN.
This whole RT system in Seattle is rediculous. I am a VERY strong advocate for rapid transit but only if the dollars are spent wisely.
I would have voted this down.

Is the older section of the seattle monorail going to be torn down once this new monorail project is completed? will monorail stations be located directly in residential areas or will they be like park and ride stations in residential areas?

Is the older section of the seattle monorail going to be torn down once this new monorail project is completed? will monorail stations be located directly in residential areas or will they be like park and ride stations in residential areas?

Some will be at residential areas and some will be with skyscraper in downtown, most will be open air stations, of course with roof to keep people dry.

The price is actually $1.6 billion for the monorail and the 14 miles of line itself, $2 billion with those extras like greg_christine stated and in the article, too.
Also, remember that Seattle is hilly and it cost more to construct and plus there will be 2 main bridges, one over. up north next to 15th Ave. over the canal of the line, and the West Seattle bridge over dunaminish (sp?) river, that adds up the cost. The light rail won't work from West Seattle to Northwest Seattle, too many hills and topography to deal with, the sound transit light rail is better for other route where it's mostly flat with a few hills to deal with, just a tunnel and a few elevated lines. That's my views from what I've seen with Seattle's topography.

The Seattle Monorail Project is still a long way from being built and operating, but the agency's management and staff have come to a major milestone by reaching an agreement in principle with Cascade Monorail Co. to design, build, operate and maintain a 14-mile monorail system.

Asked to describe what it is that Seattle taxpayers will be buying in the tentative deal, SMP Executive Director Joel Horn summed it up as "a 14-mile automated, elevated, monorail system with an operating system and guideway to accommodate 20 stations (although 16 are currently in the contract), with a train configuration that is the most modern Hitachi makes, with the latest technology and the capacity to meet and exceed ridership forecasts through 2030."

Horn emphasizes, though, that it is more, that the negotiated project incorporates "a lot of the social goals and values that are important to Seattle." Those include a responsible labor agreement, a diversity management program and environmental sustainability.

It all sounds remarkably like what was promised Seattle voters when they approved the project's funding in 2002. The devil is, of course, in the details, and there are reportedly eight volumes of details that have been negotiated on this project. It will take a couple of weeks of lawyers' vetting, followed by public hearings and approval of both the SMP Board of Directors and the Seattle City Council before the project is officially on its way.

But for now, monorail supporters and everyone involved with the agency have earned a moment of celebration and congratulation. It has at times been against all odds that the project has gotten this far, beginning with its humble roots as a taxi driver's daydream pitted against the powers that be.

Will the Seattle Monorail Project be built?

67.6% - Yes, the voters in Seattle have backed it multiple times and will insist that it be built.